If the costs are similar, then there is sense in favouring the local company. But its would be a reckless use of taxpayers money to pay three times the price, just to go with an NZ company.

Also note that with CER one can not discriminate between NZ and Australian tenders.

Labour’s spokesman for economic development, Shane Jones, said the contract showed the Government’s new procurement rules were merely paying lip service. “It is bizarre New Zealand’s boat building industry was good enough for Oracle Team USA but is not good enough for the Pacific Islands,” Jones said.

So Labour support the taxpayers paying an extra $14 million. Is it now their policy that they will withdraw from all trade agreements and CER and ban all overseas companies from being able to tender for NZ Government contracts? I presume they will also be happy for overseas Governments to do the same, and ban NZ companies from being able to win overseas Govt contracts.

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This entry was posted on Wednesday, January 15th, 2014 at 1:00 pm and is filed under NZ Politics.
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147 Responses to “Labour supports paying three times as much for a boat”

Sometimes the quality of offshore work can be poor (Bangladeshi would worry me). But realistically the only hope for currently poor nations to get wealthy is for them to be able to make stuff that people want and sell it. If we start saying that we don’t want stuff made in Bangladesh, particularly higher end manufactured products like boats, then we’re basically saying we want them to stay poor and only exporting textiles and the like.

I thought one of the few things the left wing had going for them was caring about the poor. Surely the poor in Bangladesh are equally as deserving of our concern as the poor in NZ (arguably much more deserving, given what being poor in Bangladesh means v’s being poor in NZ).

In short, if the Bangladeshi offer genuinely meets the required standards, then why wouldn’t you accept it. (Of course, I can see this becoming politically embarrassing, no doubt something will go wrong along the way like it does in any contract, and that will give Labour a chance to bleat on about how it wouldn’t have happened if they’d bought locally. Ignoring that they could buy 2 boats for the same price…..)

Psycho Milt – start up a fund. get all the aggrieved lefties to contribute. I reckon you could get away with 12 million. give it to the govt and have the boat built here. easy. you know how keen the lefties are to donate their own money to things like this.

I hope so. You do know how it is that Bangladeshi companies can undercut the locals by $14 mil, right?”

Yes. The same way Auckland call centres can undercut Sydney call centres. Welcome to international trade.

Maybe we should insist that the Bangladeshis pay their workers $NZ 18.40 per hour.

Seriously the left are hypocrites. They wail and wail about evil globalisation huring the world’s poor. Well here is an example of how trade most definitely helps the poor. So they want to institute trade barriers to stop it. Unbelievable.

The price of this boat is deducted from the total Foreign Aid New Zealand gives to Tokelau, and would have reduced more by twice as much, at least, after Union cost overruns, if built in New Zealand or Australia.
The final aid balance can be be used for other aid projects.

So our Government regulates NZ companies to ensure they provide safe working environments with decent wages for the employees but then think it’s ok to award a contract to a foreign company that doesn’t have to bother with any of those pesky regulations. Sorry, but something about that doesn’t seem right to me. And how much of the amount of money that the NZ company will charge for the boat build would come back to the Government via taxes – on the company and employees? Does that narrow the gap in tenders any?

No we should not be concerned about labour regulations in Bangladesh. Even if we wanted to we can’t. The best way to help Bangladeshi workers is for the contry to become more prosperous.

On your second point, yes a local boat builder would pay tax. BUT you would only take that into account if you believed that subsidising local industry (which is what this is) was a route to higher economic activity and a higher tax take. That is not likely. Your “boat builder taxes” would go up, but your “other taxes” would go down. You are taking $14 million out of the economy as a subsidy.

I can’t believe that we have a major political party debating piolicy settings that did not work in the 1970s. The quality of economic debate in this country is going backwards fast.

So our Government regulates NZ companies to ensure they provide safe working environments with decent wages for the employees but then think it’s ok to award a contract to a foreign company that doesn’t have to bother with any of those pesky regulations. Sorry, but something about that doesn’t seem right to me.

You do sound like a socialist. Most commenters on this blog would see those as reasons why we should do away with safe working environments and decent wages, so we can compete with more “efficient” countries like, er, Bangladesh.

Thanks for your response srylands. I’m genuinely trying to wrap my head around the argument. I understand and agree with your point about subsidising local industry as a route to higher economic activity and a higher tax take. I guess what I’m trying to get at that is that a National Government shouldn’t be surprised that a NZ company can’t compete internationally when regulations and tax rates here prevent them from doing so. Stories such as these are a reminder that National should be doing more in government to assist our companies in being more competitive.

@Psycho Milt: no, we shouldn’t reduce our rules and standards just because Bangladesh don’t have those same standards. But equally we need to understand that our choice to have those standards is also a choice to be more expensive. We’re lucky in NZ to be wealthy enough to make that choice. Bangladesh aren’t that wealthy, they don’t have that luxury. Are we saying that we should refuse to let them bid on govt tenders because they have the misfortune to be poor? Doesn’t seem very caring to me. Seems like a recipe for keeping them nasty foreigners down.

The dopey at the NZLP want to retool our Porche boat factory, part of a 1.7 billion industry, to build a one off Lada Ferry at a cost around 1% of that, for a Pacific nation that we will pay for as part of our annual aid budget. Sounds like a great step forward into freakinomics.
Now why didn’t some enlightened soul get a hold of the Burnside Works and build it there for the 14 million?
Here was me thinking Shane Jones was one of the saner of them, so much for that thought.

You do know how it is that Bangladeshi companies can undercut the locals by $14 mil, right?

Yes – by providing jobs that the locals will be desperately keen to have. There is no unemployment benefit, so any job is literally the difference eating and starving. And jobs in a shipyard would require a moderate amount of tool skills, so they be better paying than many.

Psycho Milt, I’ve actually had the opportunity to travel to Bangladesh, and I strongly recommend you try and visit someday. After you’ve had to step over people sleeping in the street and been swarmed by starving beggars the minute you step outside, you may understand what a pathetic joke a “living wage” the requires enough for Sky TV and overseas travel is.

@Ross69: no, it’s not really the govts job to invent industries and then subsidise them. It’s the govts job to get out of the way, and offer a safety net to those who, through no fault of their own, don’t have enough to live on. We’re not Soviet Russia with the government deciding what will be built and by whom – we’re a market economy. You do know that Soviet Russia kinda failed, and that the market economy has lifted more people out of poverty than any other economic system, right?

Several New Zealand companies have the capabilities to build the specified ferry and most recently, Nelson’s AIMEX Ltd indicated that, based on the design criteria, they believed they could build this vessel in Nelson for NZ$14-15 million. Following further discussions with MFAT, AIMEX was advised that unless they could provide a quote in the region of NZ$9.5-10 million, they were wasting their time.

“What really concerns us as New Zealand taxpayers and representing one of New Zealand’s largest manufacturing sectors, is that the New Zealand Government is not considering the total picture for the procurement of the Tokelau ferry. We have sought the advice of highly-respected economic advisors Market Economics Ltd which advised that the government procuring a vessel from New Zealand for the sum of NZ$14 million would generate an additional NZ$9 million in GDP and sustain the equivalent of 127 employees for one year. We believe the New Zealand Government procuring the vessel from a New Zealand ship builder would be a net cost to New Zealand of NZ$5 million versus the currently planned NZ$9.5-10 million that MFAT intend to spend purchasing this vessel offshore, allowing for travel and communications costs on top of the actual vessel cost.”

In other words, not only is the govt likely to be getting an inferior boat than if one was built locally, but the decision makes no economic sense. The National Party seems to want this year to be its last in govt.

In a letter to the Right Hon. Murray McCully, Minister of Foreign Affairs and Trade, about the Tokelau ferry purchase, Busfield writes: “In addition, it is painful for the New Zealand marine industry to have the New Zealand Government, that requires a New Zealand boat-building company to have high standards of health and safety in the workforce, human rights and other protective rights for employees, to purchase a vessel from a country that has very little in this regard and is also likely to be paying employees less than $5 per day.

“We also cannot see where MFAT has considered the lifelong servicing costs in their decision-making process. We are confident that a New Zealand-built vessel would have the lowest lifelong service cost compared with the offshore ship building company considered.

To be fair, scrapping the mines inspectorate at the Labour Department saved taxpayers about $1 million. However, 29 men did lose their lives…

Maybe if the workshop at Wanganui Collegiate had tendered for the job it would have been awarded locally.

We can chuck around all the words we like about what Labour would’ve done and things like “we’re a market economy” but the determination of what is a waste of taxpayers money is totally subjective. ‘There’s a fine line between treasure and drain.’

I think Shane Jones must be laughing his arse off right about now with all the heated discussion going on about this. Had it gone the other way, and the contract was awarded locally for millions more, he would have then said it was cronyism, paying too much, waste of tax payer dollars, etc etc. Remember he is part of an opposition who’s main strategy is to just oppose for opposition sake. He would have complained in some equally shallow manner regardless of the outcome. Just make loud noises. They should rename themselves the Brick Tamland Party.

no, we shouldn’t reduce our rules and standards just because Bangladesh don’t have those same standards. But equally we need to understand that our choice to have those standards is also a choice to be more expensive.

Exactly. In this case, it’s a choice to be $14 mil more expensive. As Ashley Schaeffer points out, it’s hypocritical to require local companies to be more expensive, then refuse tenders from local companies because they’re too expensive.

Psycho Milt, I’ve actually had the opportunity to travel to Bangladesh, and I strongly recommend you try and visit someday. After you’ve had to step over people sleeping in the street and been swarmed by starving beggars the minute you step outside, you may understand what a pathetic joke a “living wage” the requires enough for Sky TV and overseas travel is.

Sure, it’s a hellhole. A solution to that problem:
1. Isn’t the responsibility of the NZ government, which is responsible for people in this country, not Bangladesh.
2. May not be greatly advanced by helping enrich the corrupt ruling class exploiting these people.
3. Would be morally dubious if it involves participating and financially benefiting from their exploitation.

No Psycho, it’s hypocritical to require companies to be more expensive, and then be surprised when they’re uncompetitive. We have international obligations to evaluate govt tenders in a reliable and above board way, and not to skew our procurements in favour of local companies. We signed trade agreements to that effect, those trade agreements give us access to other countries govt markets. Are you proposing we ignore those agreements?

My point is that I’m OK if we want to make ourselves uncompetitive in order to have a higher quality of life. It’s a valid choice, and it means we’ll be a bit less wealthy than we would otherwise. But we appear to be trying to have our cake and eat it too, and that’s not possible.

“As Ashley Schaeffer points out, it’s hypocritical to require local companies to be more expensive, then refuse tenders from local companies because they’re too expensive.”

So just to be clear, you support the application of this principle across the economy? The Government should award contracts to local compaies for all goods and services, even if they cannot compete on price? And you think this is a rational economic policy?

So to use an example – you would require the Police to have their uniforms made in New Zealand rather than China, at 3 x the cost?

Shane Jones>It is bizarre New Zealand’s boat building industry was good enough for Oracle Team USA but is not good enough for the Pacific Islands,” Jones said.

Three problems with Jones’ proposed Tokelau ferry system:

1. The ferry carries small children and old women who would not feel safe foiling between Tokelaun islands at 40 knots.

2. Neither Spithill or Ainslie have any desire to live and work in the Tokelaus.

3. If the government had given the ferry contract to a NZ company, then Labour would have been bleating about “crony capitalism” and Little would threaten to scrap the contract if Labour are elected in November.

I’m not sure why only the govt would be obliged to buy NZ made. Surely all NZ companies should be obliged to buy NZ made. And probably all NZ citizens too – we all collectively decided to make NZ made shoes really expensive, but that doesn’t make it OK to just go and buy Chinese made shoes.

I think Winston should be PM, he’s the closest thing to Muldoon we have around these days.

It is consistent with the view that the government exists primarily as a redistribution agency, and that even the parts of the government that aren’t ostensibly about redistribution, like Defence and Transport, should also act in a re-distributive manner.

1. Isn’t the responsibility of the NZ government, which is responsible for people in this country, not Bangladesh.

True. Hence why they have opted to spend only $8M of public money on a new ferry, rather than $14M. That’s $6M that can be used for the benefit of all NZers, whether as greater social spending, reduced taxes, or paying down public debt.

2. May not be greatly advanced by helping enrich the corrupt ruling class exploiting these people.
3. Would be morally dubious if it involves participating and financially benefiting from their exploitation.

Faced with an uncomfortable reality, your reaction is to ignore it and spout Marxist dogma.

There is no unemployment benefit in Bangladesh. Regardless of political will, the government simply doesn’t have the money to pay one. Ordinary Bangladeshis are not forced into these jobs, they take them gladly – a shipyard job would pay much more than pulling a rickshaw or manual labour in a rice paddy. You are saying that the moral thing to do is take away people’s jobs and leave them to starve on the street.

Did NZ companies require NZ companies to make themselves uncompetitive on price? Did they sign trade agreements committing NZ companies to compete with countries where workers are paid a pittance? I don’t recall them doing that.

@PM: when the people of NZ vote for a govt that makes NZ companies uncompetitive, then yes, they are the ones that did that. So by your logic, they should have to buy NZ made.

My view here is that it’s not that black and white. We (collectively) voted for a set of policies that make us somewhat less competitive, in return we have somewhat better working and living conditions than other countries. The natural result of that is that some contracts will go offshore, and we’re relying on the fact we have a well educated and motivated population that means that on average we’ll still do OK. Given that we collectively did that, it seems churlish to then attempt to prevent the consequences of that decision – to try to force every individual procurement to ignore the competitive reality. It’s not like everyone in NZ is unemployed, so logically we’re not losing every tender.

Personally I’d have fewer of those regulations that make us uncompetitive, and a bit more wealth creation, but I understand that I live in a democracy and that the people have spoken. I think it’s important to not try to protect “the people” from the consequences of the decisions they’ve taken, because that helps them to understand that there’s a balance, and that they shouldn’t keep layering on unproductive regulation.

Hence why they have opted to spend only $8M of public money on a new ferry, rather than $14M. That’s $6M that can be used for the benefit of all NZers, whether as greater social spending, reduced taxes, or paying down public debt.

@Ross: you assert that, but if the procurement was properly run it would have taken all relevant factors into account. If the assertion is that a NZ made boat would have had a lower life cycle cost, then the procurement would have evaluated that. If the assertion is that some magic smoke and mirrors will create “economic activity”, no doubt based on a report from one of the rent-an-economist mob, then I don’t believe it.

The bottom line is that a procurement process was run, that procurement process recommended a particular vendor. It’s a brave politician or public servant who would ignore the recommendation from an arms length procurement process.

I imagine the discrepancy came about because AIMEX Ltd knew it would be a waste of time for them to tender for the contract, notwithstanding that it was in NZ’s own interest for them to be awarded the contract. Such is the economic ignorance of this government.

The net cost of building the boat in Bangladesh is greater than if it was built here. You’re clearly happy to protect the Bangladeshi economy. You call me a protectionist yet that is exactly what you are!

“During 18 months of talks between NZ Marine and MFAT, the department confirmed there are no instructions to consider any economic gain to New Zealand from having this vessel built here versus by an overseas yard.”

Milt says the population of NZ is helping Bangladeshis exploit other Bangladeshis to a significant extent already, such that we don’t need to knacker our boatbuilding industry for the sake of exploiting some more of them.

Milt says the population of NZ is helping Bangladeshis exploit other Bangladeshis to a significant extent already, such that we don’t need to knacker our boatbuilding industry for the sake of exploiting some more of them.

Can you come out and say it explicitly? You are calling for a subsidy for a local industry.

@Kimble. It’s the logical conclusion of some left wing ideas, I’m just surprised it’s quite so blatant – I’ve usually seen it as a theoretical slippery slope that doesn’t really happen in practice.

The idea is that we make our industry uncompetitive through regulation, artificial increases in labour costs (e.g. “living wage”), labour inflexibility and red tape. We then regulate to make people buy from that industry anyway, even though it’s uncompetitive. Then we discover that nobody offshore wants to buy things from us, both because we make things badly and expensively, and because we’ve raised trade barriers against them. So then we need import controls and regulations about everything. AKA Muldoonist policies. It’s the logical conclusion of most of these policies, but I had assumed that we were still pretending we wanted a mixed economy with a blend of market and socialism, not that we were going the whole hog right now and regulating everything.

It amazes me that all you right wing market rules pay no tax dodgers, are comfortable with the Govt. continuing to steal money from NZ taxpayers and gifting it to offshore workers who do not contribute to our tax base and meanwhile leave NZ beneficiaries absorbing more money from the NZ taxpayer. Funny how you tell them constantly to go get offa their arse( the beneficiaries), and get a job at the same time ranting against the cost of that job.

Sometimes many of you are so blinded by your dogma you seem incapable of sensible thinking.

Actually why the fuck are we spending taxpayers money on anything under the label of aid.?

I predict that even under a Labour Government, the contract would have been awarded to the Bangladeshi firm. Even Labour Governments have Finance Ministers and commitments to multilateral and bilateral trade agreements.

What the left commentators here are arguing for is an abandonment of free trade, protectionism, and local subsidies, i.e a return to the policies that predated 1984. Hopefully these commentators (and those at The Standard) are just a few crazies that will not influence these policies in an incoming Labour Government. If I turn out to be wrong in this assessment, I will be leaving New Zealand.

Can you come out and say it explicitly? You are calling for a subsidy for a local industry.

In what sense does expecting the government to take into account the economic benefits of building something here constitute “a subsidy for a local industry?”

The idea is that we make our industry uncompetitive through regulation, artificial increases in labour costs (e.g. “living wage”), labour inflexibility and red tape.

A fine example of “Most commenters on this blog would see those as reasons why we should do away with safe working environments and decent wages, so we can compete with more “efficient” countries like, er, Bangladesh.”

“In what sense does expecting the government to take into account the economic benefits of building something here constitute “a subsidy for a local industry?”

Why are we having this discussion? I thought we had moved on from this idiocy 25 years ago.

If the Government buys goods and services from more expensive local firms (or forces others to do so) that will always have an economic COST. There is no benefit. Can you please clarify for us that you are advocating the economic polices of Muldoon? We can then just leave it at that and move on.

If the Government buys goods and services from more expensive local firms (or forces others to do so) that will always have an economic COST. There is no benefit.

You have no idea what you’re talking about. There are significant benefits from producing local goods. About $9 million worth of benefits in this case. The 127 local workers who would’ve been working on this project would all be paying additional income tax. Then there’s the extra spending by the workers, adding to revenue from GST, and of course adding to the profits of local sellers. These profits would generate tax revenue.

But then wouldnt spending $28million lead to a GREATER than $18million economic windfall?

I mean, that would push the workers into a higher tax bracket so would be paying more than double the income tax. They would have more money to spend so would buy more things. So that would boost GST and the revenue of other firms…

“…..So our Government regulates NZ companies to ensure they provide safe working environments with decent wages for the employees but then think it’s ok to award a contract to a foreign company that doesn’t have to bother with any of those pesky regulations. Sorry, but something about that doesn’t seem right to me…..”

Well put. My thoughts exactly.

[I don’t know much behind all this but I’m going to take a quess.]

National would have been far better to just wait and see what the tenders Tokelau OFFICALS recieved after doing ALL the homework themselves – and then decided on what to give to Tokelau after seeing ALL the tenders ect. The whole thing would’ve then been seen instead as foreign aid – charity. And who’s going to argue with that? The reult would have been the same.

I bet the contract stipulates that the boat be built to ‘minimum naval standards’ so that it complies with international standards though. Yet NZ businesses are not operating on a level international playing field with the likes of Bangledesh. And it is National & Labour who have both made all our local laws.

So how can Bangledesh meet minimal international naval laws – yet not meet basic health and saftey laws?

Now National’s got the entire left out swinging at them – in an election year. And National has to play defense again!

That’s the problem with Big National/Labour Monolith Government – they don’t know where to stop sticking their noses in to other peoples business.

Why don’t they stick their noses into Bangladesh – just like they’re doing with Tokelau.

Yeah I knew it was something like that…………but why don’t they just let the Administrators of Tokelau do the leg work[with the aid of the nz public service]…….and then National deciding the money after viewing all the evidence…….in that way they seperate themselves in as much that Tokelau is a territory.

NZ City Councils operate like that with government.[for the most part].

So. By your own admission, building the boat in NZ would cost $5 million more, meaning that not only does no money go to Bangledesh, Tokelau is no better off and some other pacific nation loses $5 million big ones.

“If the Government buys goods and services from more expensive local firms (or forces others to do so) that will always have an economic COST. There is no benefit.”

“”You have no idea what you’re talking about.””

Actually I do know what I am talking about. I am an economist. I worked in the Treasury for 10 years. I also worked for the Australian Government on tariff reform in the 1980s. I managed the Australian Productivity Commission work programme on industry policy reform in the early 1990s.

The nonsense that you are spouting about “buying local benefits the economy” is Muldoonism. It means that resources are directed to inefficient industries which fuck the economy and destroy our ability to link internationally. The economic impacts of policies you are advocating are adverse and have been exhaustively modelled for over 40 years.

“……..A former chief of police in Niue has been appointed as New Zealand’s new high commissioner to the island.
Ross Ardern will replace Mark Blumsky.
The New Zealand foreign minister, Murray McCully, says Superintendent Ardern will work with Niue’s authorities to help support the island’s increasingly vibrant economy and to address the challenges that come with growth.
He has extensive experience in the Pacific, including roles as the New Zealand Police Liaison Officer for the South Pacific, based in Samoa and before that more than 4 years as chief of police on Niue…….”

You sound like one of those “green” idiots who constantly boast about the number of jobs their renewable energy schemes will create.
If they were not complete economic illiterates they would understand that the merit of such schemes is in how few resources they consume – including labour – rather than how many. The last thing they should be boasting about is how many thousands of workers are required to implement their white elephant schemes.

And that’s just one of your howlers.

‘Then there’s the extra spending by the workers, adding to revenue from GST, and of course adding to the profits of local sellers. These profits would generate tax revenue.‘

“Economic benefits”? Like those that come from building sports stadiums? Or monorails?

Have you been drinking?
1. The boat is being built and paid for either way. It’s just a question of who builds it, and for how much. Wibbling about sports stadiums and monorails is irrelevant.
2. Economic benefits like those that come from paying wages and salaries to people living in this country, and having tax paid on them and having them spent in this country’s economy. That is a factor to take into account, isn’t it? Well, it is unless you’ve decided to outsource your thinking to a discredited ideology, I guess.

Yes, building it in Bangladesh comes with a cheaper price tag. The question is whether that cheaper price tag outweighs the economic and social benefits of spending money in this country rather than shipping it overseas. National says yes, Labour says no. Or in other words, National says NZers can get fucked if it will save a few quid, Labour says maybe NZers count for something after all – voters, take your pick.

@PM: nice cherry picking of a quote. Do you have an answer to the Muldoonist label?

I could as easily have taken the whole paragraph – it says what it says.

Re Muldoonism, the answer is “Cobblers.” There are a couple of aspects to this:

1. It’s just plain wrong for a government to enforce a minimum wage and minimum working conditions in its own country and then decide it’s going to buy stuff it needs from this other country without those conditions because it’s cheaper.

2. When deciding whether to buy from a local company or a foreign one, a government ought to take into account the relative merits of the money getting spent in our economy compared with it being spent in another country’s economy, rather than just looking at the sticker price and going “Ooh, this one’s cheaper!” Because the job we’re paying these sad sacks of shit sitting around the cabinet table for is to look after this country’s interests, not just to spend the least money. Maybe after they’ve looked at it and weighed the benefits, it will still make sense to buy the cheap shit from the country with the slave labour (at which point, they should really revisit number 1) – but what they should definitely not do is refuse to consider the relative merits because doing so might make ideologues denounce them as “Muldoonist.”

Forget Bangleddervishes – everything can be made cheaper overseas.We should bring them here and learn how to do it or send our remaining shipwrights to gather local knowledge. maybe our mining safety inspectors could, doctors,lets all go.

Except that ‘economic benefits’ are used as an excuse for horrible investments like stadiums and monorails. Any amount of poor central investment can be excused based on the “economic benefits” found by some pocket economist.

Economic benefits like those that come from paying wages and salaries to people living in this country, and having tax paid on them and having them spent in this country’s economy. That is a factor to take into account, isn’t it?

The tax the government received back on the amount they paid a local producer MAY reduce the cost of that bid. Thats a discount, not an economic benefit.

If the local boat building industry is so expensive that it can get no business other than central government charity work, then look at why that is and rail against that. Don’t complain that the government isn’t buying enough boats. That does nothing to fix the problem.

Or in other words, National says NZers can get fucked if it will save a few quid, Labour says maybe NZers count for something after all – voters, take your pick.

National says NZers can save a few quid, Labour says NZers count for something – votes.

That’s what is really going on. National doesnt spend National’s money. It spends NZers money. When it saves money, it saves New Zealander’s money. In contrast, Labour see this as an opportunity to exploit the average NZer’s folk-wisdom when it comes to economics.

At no point does your discredited ideology (how’d you like that stimulus?) allow you to say a price is too high. You refuse to acknowledge ANY costs to the policy of only buying locally. If the local price of the boat was $100 million, then how would you be able to say that it is too high? If $14m has great economic benefits, then surely $140 million would have 10 times the benefits. How much IS too much?

If paying more for the boat locally was a benefit to the economy then the govt should pay me a hundred trillion. I will deliver a really good boat and NZ will be the richest country per head in the world. Greebore economics in a nutshell.

It’s just plain wrong for a government to enforce a minimum wage and minimum working conditions in its own country and then decide it’s going to buy stuff it needs from this other country without those conditions because it’s cheaper.

That is simply an argument that perhaps the govt has set the minimum wage and working conditions too high as we are not competitive. Are you advocating that we reduce the minimum wage?

Actually I do know what I am talking about. I am an economist. I worked in the Treasury for 10 years.

So, you’re a defunct economist. I’m not sure that helps your case. Your credibility is shot when you don’t see any economic benefits from having the boat built here. There’s about $9 million worth of benefits.

It means that resources are directed to inefficient industries which fuck the economy

“Currently and in the past, New Zealand companies have built vessels for other countries’ local and national governments such as Australia’s State of Victoria recently ordering a police boat from Whanganui’s Q-West Boat Builders. It is ironic for the New Zealand Government has now purchased a vessel from another country. … From 2011 industry analysis figures prepared by Market Economics Ltd, New Zealand’s ship and workboat sector had an output of NZ$330 million, employed a total of 2,041 full-time equivalent personnel and expected to grow to an output of NZ$574 million by 2021.”

Hmmm doesn’t sound inefficient to me. And the only thing that is fucked is your logic.

So. By your own admission, building the boat in NZ would cost $5 million more, meaning that not only does no money go to Bangledesh, Tokelau is no better off and some other pacific nation loses $5 million big ones.

No, it doesn’t cost $5 million more. The net cost would be $5 million which is cheaper than what it will cost to buy from Bangladesh. In effect the NZ Government is subsidising cheap labour in Bangladesh, reducing its tax take here, buying a likely inferior product, with no economic benefits to NZ.

In other words, you are ignoring all the real jobs that will be lost or not created when the government takes all those extra millions.

Wat, it’s a very simple concept which you and others are struggling with. The net cost of building the boat is less than the cost of buying it from Bangladesh! There are no economic benefits for NZ from the deal.

Far from costing jobs, it would have the opposite effect. Some 127 boat builders would be employed for a year, with the economic benefits that that would bring to the region (and of course to the government – ie, taxpayers).

You think the fact that labour costs here are higher than fucking Bangladesh means we’re paying too much for labour? Oh, wait – of course you do, this is Kiwiblog.

Actually it was who said that if our govt sets a minimum wage and working conditions then it should not be giving work to offshore companies. Given the enormous price difference between the bids and the fact that our govt does set the minimum wage and working conditions, the only feasible deduction is that you therefore believe that the govt has set those too high (and as a result Kiwi companies are unable to be competitive in global markets.)

Or is it perhaps that you want Kiwis to prosper by selling our goods offshore, but us keeping all our consumption local and not reciprocating?

It does? I do? Hello-o, I’m over here – that’s a straw man you’re busy beating the crap out of over there.

Really. Then you would have no problem explaining why $9 million is a good amount to overpay but $10m, $20m, $50m, and $100m are too much.

Like I said, and none of you have had the guts to address, the tax paid and “extra spending” generated from overpaying even more than the currently proposed premium could be even higher, and you have no reason to ever stop over paying. When does over-paying become a bad thing?

I get it now – you’re mixing up my posts with Ross69’s. They’re different posts.

Really. Then you would have no problem explaining why $9 million is a good amount to overpay but $10m, $20m, $50m, and $100m are too much.

Since you’re so fond of reductio ad absurdum: if buying stuff that isn’t made using horribly exploited labour with atrociously poor working conditions is “overpaying,” buying stuff made by slaves would be your optimal deal, because there’s nothing cheaper. Shouldn’t you be lobbying the government to overturn the foolish, ideological prohibition of slavery? We could have cheaper stuff!

We have a bit of history in buying bargains that have buoyancy problems or engineering difficulties. However best price of comparable quality is the way of the world. Compete and win, over price and cry in the milk. This could be another example of attempts at ‘job protectionism’ in the free market under ridden by management and labour not being innovative enough to be price competitive in an international market. If it was easy every one would be doing it, so because it isn’t easy – smarten and toughen up, or go home.

Its not reductio ad absurdum when your position is that there are compounding benefits to buying a more expensive product locally that exceed the amount of the premium.

Why would the proposed premium be covered by “economic benefits” but a higher premium wouldnt be?

Why dont “economic benefits” scale?

And can you stick to one argument at a time? You are just changing the subject every time you face a challenge.

“Its about exploiting Bangladeshi workers!”
But not employing them wouldnt help.
“No, its about the economic benefits!”
But that implies that there is no upper bound to overpaying.
“No, its about the government, they should be looking out for NZers!”
But they are by trying to have NZer’s not overpay for the boat.
“No, its about knackering the local industry!”
But if the industry cant survive without government charity, then they arent viable businesses.
“No, its about exploiting Bangladeshi workers again!”

Its not reductio ad absurdum when your position is that there are compounding benefits to buying a more expensive product locally that exceed the amount of the premium.

Yet again, perhaps you could stop attributing to me stuff you read in Ross69’s comments.

And can you stick to one argument at a time?

There are multiple arguments against what the government has done here, why shouldn’t I use all of them? They include:

1. The Bangladeshi quote is cheaper only because the workers are grossly underpaid and their conditions are terrible. That alone would be sufficient not to accept it.

2. As the body that requires NZ companies to provide higher wages and conditions, it would be hypocritical for the government to weasel out of paying the costs those requirements impose. That also would be sufficient reason not to take the cheapest option, for anyone but weasels.

3. The government’s role is to protect this country’s interests, which consist of a bit more than paying the lowest price for stuff. Among those interests are the encouragement of economic activity in this country rather than others. That alone is not sufficient reason to refuse a Bangladeshi quote for a ferry, but it is nevertheless something that ought to be taken into account when making a decision, not rejected on the basis of a discredited ideology.

4. The consideration of tenders from Bangladeshi companies by the government implies there to be some kind of competitive equivalence between First World and Third World manufacturers. There isn’t, and it’s wrong of a government to pretend that there is. If they’ve signed agreements that require them to make such a pretence, well you fucking dumbasses – keep in mind whom you’re representing.

1. The Bangladeshi quote is cheaper only because the workers are grossly underpaid and their conditions are terrible. That alone would be sufficient not to accept it.

Define underpaid.

Then tell me how paying them zero is better.

2. As the body that requires NZ companies to provide higher wages and conditions, it would be hypocritical for the government to weasel out of paying the costs those requirements impose.

The government enacted the will of the people and continue to enforce it. If it is wrong that they dont voluntarily pay more, then it is also wrong for the people to do so. If you support the policies that lead to a higher cost, then you should also pay a premium. Do you?

3. The government’s role is to protect this country’s interests, which consist of a bit more than paying the lowest price for stuff.

The government doesnt have to fulfill EVERY duty to the nation with every action. And a bit in this case is a huge amount. Don’t trivialise the equivalent of 300,000 man hours of effort.

You keep saying that an ideology is discredited, but havent named it. It is also extremely hypocritical for you to say that when your Protectionist ideology is about as discredited an ideology as you can get.

4. The consideration of tenders from Bangladeshi companies by the government implies there to be some kind of competitive equivalence between First World and Third World manufacturers.

Competitive equivalence is when two things do not differ. Why would you put something out to tender when all the respondents are the same? Putting something out for tender DEMANDS there be no competitive equivalence.

Bangladesh has cheap labour. NZ doesnt. They will be cheaper because of it, and in a just world would attract business activity. You want to cry about that? NZ has other advantages. Do you hear Bangladesh whining about the unfair advantage in quality in First World production?

“Among those interests are the encouragement of economic activity in this country rather than others. ”

So why don’t we withdraw from efforts to promote free trade, and reintroduce tariff protection? That is the logical conclusion of what you are saying.

As I said yesterday your views on economic policy were defeated 25 years ago.

New Zealand should only be engaged in economic activity where it can compete in markets. It is NOT the role of the Government to “encourage” (as you put it) any economic activity by distorting markets. We cane the EU and USA for doing this in agriculture. Now you want to do it in ferries!

The Government should have abolished all of the remaining import tarriffs in NZ (mainly on textiles and clothing) and ONLY subsidise postive externalites (e.g R&D spillovers). Reduce regulation, reduce taxes, reduce Government. After we get those fundamentals right, we will still have a shipbuidling design and construction industry. But we will not and should not be building ferries that can be built cheaper in Bangladesh. For the same reason we don’t build a pair of socks that can be made cheaper in Bangladesh.

Then you would have no problem explaining why $9 million is a good amount to overpay but $10m, $20m, $50m, and $100m are too much.

You seem to be talking to yourself on this. Who said $9 million is a good amount to pay? If the boat was built locally, the net cost would be about $5 million. You seem comfortable paying more, for what is likely to be an inferior product.

“I love how your kind so casually downplay the transference of millions of taxpayer’s money to hand-picked friends of the govt intelligentsia. ”

I agree with a post yesterday that if MFAT had cosen a local (expensive) tender, the line from labour would have been along the lines “Government wastes money/crony capitalism/makes a mockery of trade policy”. Next thing The Standard would have said the CE of the local company as a “rich mate” of J Key.

The whole thing is bullshit. The right decision here was just so bloody obvious that even a Labour Government woould have chosen the Bangladesh bid.

So why don’t we withdraw from efforts to promote free trade, and reintroduce tariff protection? That is the logical conclusion of what you are saying.

Actually, that’s the reductio ad absurdum of what I’m saying. It’s a fun game anyone can play, eg the reductio ad absurdum of what you’re saying is that the NZ govt has no more of an obligation to the citizens of NZ than it does to the citizens of Bangladesh. Of course, I wouldn’t present that reductio ad absurdum as something you are actually saying, because I’m not an idiot.

I stop short of saying the decision is wrong, but it is not as simple as some people seem to think. If the boat was built here, much of the money would go back into the NZ economy and not the Bangladesh one. There are follow on benefits which are hard do quantify.

You seem to be under the impression that the NZ government has some kind of obligation to give Bangladeshis money. It kind of does, in the sense of foreign aid money, but there’s no corresponding obligation to buy their stuff.

If you support the policies that lead to a higher cost, then you should also pay a premium. Do you?

I’ll bear it in mind the next time I’m issuing an international call for tenders.

And a bit in this case is a huge amount. Don’t trivialise the equivalent of 300,000 man hours of effort.

“A bit” didn’t refer to money. Try reading it again.

You keep saying that an ideology is discredited, but havent named it. It is also extremely hypocritical for you to say that when your Protectionist ideology is about as discredited an ideology as you can get.

I’m aware libertarians fondly imagine they don’t have an ideology. It’s almost endearing – almost. Also, there’s a difference between thinking that maybe our government shouldn’t be participating in the exploitation of Third Worlders and should maybe take the benefits of doing things locally into account when considering tenders, and Fortress New Zealand.

Bangladesh has cheap labour. NZ doesnt. They will be cheaper because of it, and in a just world would attract business activity.

In a “just” world they’d be struggling to attract any business activity at all while there’s a reasonable chance their workers will burn alive or be crushed in their factories, and a list of other things. Of course, it’s not a just world, and they attract plenty of business from people happy to enjoy cheaper prices based on other people’s misery – that doesn’t mean the NZ government should be contributing to it.

I wonder — what would happen to the Bangladeshi workers, if everyone boycotted Bangladeshi suppliers?

What would happen if everyone said We’re not buying this shit unless you start implementing some improvements to pay and conditions for your workforce, and start actually paying attention to those safety regulations you’re currently bunging officials some cash to ignore? I dunno – maybe Bangladesh’s ruling class would throw up their hands and say ‘Aw, we’re fucked – might as well give up now.’ Or not.

Yeah, but who the fuck are they? How about you do it? Is it anything less than the NZ minimum wage? Less the the US one? $10? $5?

You didnt answer because you have no answer.

You seem to be under the impression that the NZ government has some kind of obligation to give Bangladeshis money.

And there you go changing the subject whenever you stumble upon the stupidity of your position.

How about we stick to a single subject at a time? How about you answer why the “exploitation” of Bangladeshi workers is so much worse than unemployment?

I’ll bear it in mind the next time I’m issuing an international call for tenders.

Almost every product you buy has “Made in ” Somewhere written on it. But you obviously dont care about overseas workers when you spend your own money.

I’m aware libertarians fondly imagine they don’t have an ideology.

You dont have to be a libertarian to support free trade. Merely being a historian is enough.

Also, there’s a difference between thinking that maybe our government shouldn’t be participating in the exploitation of Third Worlders and should maybe take the benefits of doing things locally into account when considering tenders, and Fortress New Zealand.

First of all, why should the government be prevented from engaging in trade with Third Worlders when everyone else can. Do you exploit Third World workers when you buy anything from them?

The benefits of doing things locally is constantly being over-stated, by the people who would directly benefit from the practice. That is the sort of ‘economic folk-wisdom’ that Labour and the Left in general loves to exploit.

In a “just” world they’d be struggling to attract any business activity at all while there’s a reasonable chance their workers will burn alive or be crushed in their factories, and a list of other things.

Far better they be unemployed. You still havent address that point honestly.

You prefer unemployment over work for these people.

I hope you meet some of them one day. I wonder if you would tell them your opinion? How would that go?

“Oh, you know that job you had? Yeah, I didnt think it was a very good job and that it should be done by rich people in my country instead, so I petitioned my government to take it away from you. You’re welcome.”